Charges For Transportation Of Goods From Factory To Buyer's Premises, can't be Assessed: CESTAT

The two-member bench headed by Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the "place of removal" continues to be the seller's premises, whether it be the factory gate or depot or any other place relatable to the seller. In terms of Section 4 of the Central Excise Act, the value of the goods is the transaction value of the goods for delivery at the time and place of removal.

The appellant/assessee has supplied the goods on which it paid excise duty to the customers on a FOR destination basis. In other words, in contracts, the appellant was required to deliver the goods at the buyer's premises and not at its factory gate.

The department has issued a show cause notice and demanded central excise duty on the freight charges paid for transport of goods from the appellant's premises to the customer's premises when goods were sold on a FOR basis to the customers by the appellant.

The question is whether the cost of freight from the factory/depot of the appellant to the customer's premises is includible in the assessable value for calculating the central excise duty.

The appellant submits that regardless of the fact that the sale of goods is on a FOR basis, central excise duty cannot be charged on the cost of freight from their premises to the premises of the buyer.

The tribunal held that the place of removal in every case has to be only the place relatable to the seller and it cannot be the buyer's premises, even though the sale may be completed at the buyer's premises when goods are sold on a FOR destination basis.

Case Title: M/s Jindal Tubular (India) Limited Versus The Principal Commissioner, Central Goods & Service Tax & Central Excise, Ujjain

Citation: Excise Appeal No. 51725 Of 2019

Dated: 26.07.2022

Counsel For Appellant: Advocate R. Santhanam

Counsel For Respondent: Authorised Representative Sanjay Kumar Singh

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